HONG KONG, Dec 15, 2015:
Standard Chartered plc (StanChart) has axed at least half a dozen oil and gas (O&G) advisory banking roles in recent weeks, ending an eight-year attempt to build a global energy mergers and acquisition (M&A) team, said people familiar with the matter.
Asia-focused lender StanChart expanded its energy M&A advisory team just before the global financial crisis by acquiring Harrison Lovegrove, a well regarded boutique advisory firm for oil and gas.
At that time, more than two dozen bankers came over to StanChart from Harrison Lovegrove.
But chief executive Bill Winters, who is cutting 15,000 jobs globally to restore profitability, is getting rid of expensive specialised bankers and taking a step to reduce the bank’s global ambitions in the M&A space.
Most of the roles are in Singapore, three people familiar with the situation said. A StanChart spokeswoman declined comment on the departures.
The bank wants to move away from depending on advisory fees, and rely more on revenues generated by selling forex hedging products used in M&A transactions, the sources said.
“The model of pure advice doesn’t fit with StanChart’s new scheme of things. It’s an expensive proposition,” one person familiar with the development said.
In years following Harrison Lovegrove acquisition, StanChart’s Asia Pacific M&A league table ranking improved to 13th in 2013 from 35th in 2008, according to Thomson Reuters data.
But as the bank’s overall performance dropped due to higher regulatory problems, its energy M&A business also suffered and StanChart’s ranking slipped to 44th this year.
When StanChart acquired Harrison Lovegrove in 2007, it had advised on about US$20 billion (RM86.6 billion) worth of M&A.
One of the founders, Martin Lovegrove, later quit StanChart and now is a senior adviser to US energy major Chevron Corp.
The sharp fall in oil prices has resulted in less M&A opportunities, in particular from national oil companies, and increased the need for preserving capital, resulting in less work for bankers.
However, bankers say it is at times like this when clients need advice on business restructuring and capital raising.